Eliminating three replacements and the 1-point VC unit seems like a legal play as the rules are written:
Section 5.5 Replacement Points - "All losses sustained in combat may be absorbed in two ways: by removing units or by expending replacement points..."
Section 5.5 Allocating Losses - "A player may not expend replacement points in excess of his forces combat strength."
The first rule was satisfied, as was the restriction imposed by the second.
Some sort-of related questions:
For a unit on a Holding operation, do you use the doubled or undoubled strength to determine maximum replacement use? I've been assuming undoubled strength, since 6.2 states that the undoubled strength is used to "determine losses" and it doesn't make an exception for maximum replacement use (whereas for the ARVN Regional Forces modifier, it does spell out an exception).
If a US unit is defending in a city, town or cultivated terrain and thus receives the ARVN Regional Forces modifier, does that allow SVN replacements to be used? I've been assuming yes, since this rule is included in the section on the ARVN.